Top Economist Warns Green Jobs ‘Creation’ Will Undermine Recovery

Date: 02/09/11

One of the UK’s leading energy and environment economists warns that the government’s promise that green energy policies will create tens of thousands of jobs and stimulate competitive industries is an illusion.

In his report The Myth of Green Jobs, published today by the Global Warming Policy Foundation, Professor Gordon Hughes (Edinburgh University) dispels this assumption by finding that

• The government target for generating electricity from renewable energy sources will involve a capital cost that is 9-10 times the amount required to meet the same demand by relying upon conventional power plants.

• The extra investment required for renewable energy – about £120 bln – will be diverted from more productive uses in the rest of the economy.

• Increases in the cost of energy together with the diversion of investment funds means that many manufacturing firms will either go bankrupt or relocate.

• It is impossible for the UK to acquire a long-term comparative advantage in the manufacture of renewable energy equipment by any combination of policies that are both feasible and affordable.

• Policies to promote renewable energy could add 0.6-0.7 percentage points per year to core inflation from now to 2020.

• The cumulative impact of these policies could amount to a loss of 2-3% of potential GDP for a period of 20 years or more.

“Claims by politicians and lobbyists that green energy policies will create a few thousand jobs are not supported by the evidence. In terms of the labour market, the gains for a small number of actual or potential employees in businesses specialising in renewable energy has to be weighed against the dismal prospects for a much larger group of workers producing tradable goods in the rest of the manufacturing sector,” Professor Hughes said.

Dr Gordon Hughes is a Professor of Economics at the University of Edinburgh. He was a senior adviser on energy and environmental policy at the World Bank until 2001. He has advised governments on environmental policies and was responsible for some of the World Bank’s most important environmental guidelines.